Stephen Elop on Nokia’s future with Microsoft [Interview]

It has been nothing short of a roller coaster ride for Nokia and its former CEO and current EVP of devices and services business, Stephen Elop, ever since Nokia announced it was selling its handset and services business to Microsoft. The deal did not really come as a surprise and was in a way predicted in February 2011 when Elop announced a strategic partnership with Microsoft and choosing its still raw Windows Phone operating system as Nokia’s only smartphone platform.

Nokia’s Lumia devices might not have set the smartphone world on fire, but one thing everyone would agree is that they have evolved quickly over the past two years. “We are listening and learning from consumers and are willing to iterate in future products. We are open to learning,” Elop said in an interview on the sidelines of the company’s annual Nokia World event.

However, with the Microsoft acquisition inching closer, the question on everyone’s mind is how Nokia would function under Microsoft and what Microsoft would do with the company. Elop provided a glimpse of the future during the interview.

Elop thinks that Nokia still can be a major force in the smartphone space and it is all about catching the right wave. “The big moves in technology tend to come when there is a major change in user interaction – how you interact with the device. And whether it is work that everyone is trying to do with voice and other ways of interaction, you can see seeds lying around,” he said.

“Before the iPhone blended touch so well in 2007, there were touch things all around but they weren’t quite there. Same way before Windows user interface became popular there were experiments like Xerox Parc and all sorts of examples. At certain point those new interaction models are figured out and become apparent. And we are working on those sort of things and you will see them from us in the future,” Elop said.

He believes that Nokia’s expertise will help Microsoft reach audiences it could not reach before, especially those users who have never used the Internet before and cannot afford to buy a smartphone, PC or tablet. Nokia’s Asha series, in particular, could be the medium for Microsoft to target such users for its Skype and SkyDrive services.

“What you should expect to see is that those Microsoft services that benefit from larger groups of people, getting exposed to people that Microsoft has never experienced,” he predicted.

With Instagram finally coming to Windows Phone, Nokia and Microsoft can now claim they have most of the heavily used smartphone apps on Windows Phone. But many would still question why is it happening now and why it couldn’t have happened earlier, which could have probably given Nokia’s Lumia devices greater love from the developer community.

“Having every application doesn’t always make you a winner in the market. You could say that about Windows Phone before we got Instagram. But that takes you only so far and doesn’t make you truly competitive,” Elop said. Adding, “We focused on a certain differentiators very heavily – design, imaging, location based services and there are a number of things we have focussed on.”

Things get a little complicated, however, with Elop being one of the few candidates that Microsoft is considering to succeed Steve Ballmer as its CEO. He has a major advantage, having headed Microsoft’s money making Office division before joining Nokia as its CEO in September 2010. Elop deflected the question when he’s asked how he would reinvent Microsoft if he becomes the CEO, saying it is up to Microsoft to give him the top job.

“The introduction of Nokia and its hardware capability, in a larger software company is a huge change and I’m looking forward to driving that change in any capacity within Microsoft,” he mentioned.

Here are some edited excerpts from the interview.

Won’t the Lumia 2520 compete with Microsoft’s Surface 2, which is also launching today?

Microsoft is a company that’s interested in building a larger ecosystem. So encouraging other players to building products with Windows RT, Windows and Windows Phone is a part of its strategy overall. I think what you saw today was we were focussed on a particular area, specifically mobility – so whether it is LTE connectivity, the ability to see something in sunlight… there’s a whole lot of things we have done that is building on our heritage and will appeal to a certain class of consumers.

That may overlap or may complement what Microsoft is already doing. I think it is good to have different people doing different things from different angles.

What happens to the Asha series of devices under Microsoft?

When Steve Ballmer is asked that question he says it is the most obvious proof of their interest in the business is that they bought it. The deal is not closed yet but that has been their intention from the beginning. The thing to realize is that we at Nokia have for many years talked of connecting the next billion people and give people their first connected experience with Facebook, with WhatsApp and whatever their social life may be.

When you think about those next billion people, Microsoft has no way of reaching those billion people today because those people are not going to buy a PC generally because of their income levels. They are unlikely to buy a tablet again because of the price points. But with a device like Asha, in the future they will have an opportunity to introduce them to Microsoft services like SkyDrive. What about Skype? Their business is about having a large number of people all over the world, especially those people who want to communicate at very low price points. This is a great platform for something like that.

So what you should expect to see is that those Microsoft services, which benefit from larger groups of people, getting exposed to people that Microsoft has never experienced. And Microsoft finds that very exciting.

What makes Nokia confident it can sell a Windows RT tablet when no one else, including Microsoft itself, has managed to sell many?

A couple of things. I think because we have the companion story across our products. Our focus on mobility, I think, is important. But also the advances in Windows RT are really important. So just for myself, the very first version of Windows RT that was a bit harder for me to consider putting in my bag and my bag is filled with hardware, as you can imagine, so something has to come out of the bag if something new goes in and that’s my ultimate test.

But this device (Lumia 2520) goes into the bag because I can watch movies, have 15-16 hours of battery life with the cover. But I’m also, not surprising because of my Microsoft past, an Office poweruser and Outlook is the center of my business existence. And this device gives me the full Outlook experience fully integrated and I can have my work world, personal world and content consumption world. So guess what, this device can go in and some other devices can come out of my bag. Windows RT and its development have also really made a difference.

What does Nokia hope to accomplish from the Lumia 1520?

The first thing that comes to people’s attention is whether the form factor is right or not. For me, a business user, the big display would let me look into the details of a spreadsheet like you would want to see a document. There is another class of people who while traveling in an airplane would want to prop that up and watch a movie on a 1080p, very deep display is something that I think really excites people.

The Lumia 1020 as you know very well is an extreme imaging device and it is designed to look like that and has the most capable imaging sensor. On this, with a 20-megapixel image sensor, you can do a very large proportion of what you can accomplish with the Lumia 1020. But it is less of, to use your word, an audacious design. So I’m interested to see how that lands with the consumers as well. It is exciting and lot of fun.